Mobility Matters: The Mobile Wallet Wars

Put your money on Google. That is the headline from a survey payments company ACI Worldwide conducted at the National Retail Federation annual confab where the question was: who will win the mobile wallet wars.

Google won a majority of votes – 53%. PayPal notched 25% of the votes. Isis – the NFC project involving Verizon, AT&T and Sprint – stumbled its way to 4% of the vote.

Almost one in five - 19% - put their wager on an entrant that is not yet identified.

Factor in a Harris poll from a few months ago that found 66% of us predict that credit cards will vanish as more of us pay with smartphones. About one in three expect this handoff to occur within the next five years.

If you are skeptical about digital wallets know that the skeptics may outnumber believers, at least among financial services executives. Forward motion towards wider wallet adoption has seemingly gotten just about nowhere in the past year. Few consumers have ever used one, few mobile devices have a digital wallet capability, and not many more retailers are equipped to accept them anyway.

But ask the experts and their advice is consistent: ignore digital wallets at your own risk because they are the future.

That clock is ticking.

The bad news for credit unions: financial institutions are on the edge of getting disintermediated from the nascent wallet play as non-banks (such as PayPal) gain traction.

This remains extremely early days and in that there is hope for financial institutions, suggested Brandon Kuehl, who last week conducted a webinar focused on digital wallets for Des Moines, Iowa-based The Members Group.

Per Kuehl in an interview, the webinar was “very well attended. There is a lot of credit union interest in digital wallets. They want to know where to take their first steps.”

As for options, Kuehl pointed to V.me, a digital wallet via Visa that presently is on offer to credit unions via The Members Group, CSCU and PSCU.

He also fingered Dwolla, the Des Moines-based payments innovator, because of its history of working with credit unions.

But in lots of ways the most intriguing mobile wallet option for credit unions is Google Wallet, which may be enigmatic in its dealings with financial institutions. On the one hand, Google invites card issuers – that means you – to fill out a form to initiate the process of enrolling a credit card in Google Wallet.

Google has said it welcome inquiries from credit unions and it also has insisted – repeatedly - that it has no interest in a slice of the interchange pie, not even a few crumbs. It sees its cash flow coming in what it does best: selling targeted ads and in gaining ever sharper data about who its users are and what they want.

Some experts suggest however that Google – never known for its high-touch customer service – is in fact ill-equipped to deal directly with smaller financial institutions and has been exploring allying with third-party financial services wholesalers to stand between them and small institutions.

Either way, though, suggested Kuehl, credit unions have at least those three low-cost wallets with comparative ease of entry and low or no costs – V.me, Dwolla and Google Wallet -- and his firm advice is to take the plunge now.

His prediction is that enthusiasm for wallets will hit an inflection point before long and when that happens, the institutions that have yet to take any steps may find themselves left behind. “You don’t want to be last to this party.”

“Get started now,” urged Kuehl who stressed what he is suggesting is launching a pilot – it doesn’t have to be extended to the whole membership – that lets the credit union learn how wallets work, how their members use them, and how to make the experience richer and more satisfying.

“Learn from your members. Now is the time,” said Kuehl.

Do this now and when digital wallets go prime time – in a year or three – you will be at the head of the pack.